VGTel Inc (OTCMKTS:VGTL) With a Speculative Bounce
VGTel Inc (OTCMKTS:VGTL)’s performance has been rather appalling over the last few years. Back in August 2013, when we last covered the stock, it was hovering around the $1 per share mark, but during the following ten months, it managed to slip to its current 52-week high of just over $0.60. That’s bad enough, but VGTL‘s ride has been particularly bumpy since the beginning of 2015.
In February, the stock was just about managing to stay above the $0.01 per share mark. Then, it seemingly lost the will to live and it started plummeting until it finally reached a bottom of $0.0016 a couple of weeks ago. Clearly, investors weren’t quite happy with VGTL back than and we’ll now look for the reasons for this.
The latest 10-Q is a good place to start. It covers the fourth calendar quarter of last year and it presents us with the following figures:
- cash: $43 thousand
- current assets: $737 thousand
- current liabilities: $2 million
- NO quarterly revenue
- quarterly net loss: $285 thousand
The report certainly pushed some investors away from the stock and there weren’t any press releases to draw them back in. The latest announcement came out in the middle of March and after that, the management team fell eerily quiet… until April 2, when they filed a Form 15 for the termination of VGTL‘s SEC registration. Thankfully for the shareholders, the management team then changed their minds and a week later, they withdrew the filing.
As you can see, investors did have one or two reasons to stay away from VGTL, but right now, they seem to be getting back to the stock. After hitting a 52-week low on May 12, the ticker managed to regain some of the lost ground and, although it hesitated before the Memorial Day Weekend, it managed to gain as much as 64% over the last two sessions which means that it’s currently sitting at $0.0036. Yesterday, it also generated a dollar volume of over $160 thousand.
Investors are clearly interested again. But why?
We’ve already established that there are no new press releases and we know that there’s been no SEC filings since the withdrawal of the Form 15. Despite this, the social networks and discussion boards are full to the brim with people who are saying that the stock could easily go above the $0.01 per share mark. The people behind a promotional outfit called Penny Stock Dream also appear to be pretty excited about VGTL.
As is often the case in Pennyland, the hype doesn’t appear to be caused by anything substantial happening to the company, but despite this, it has already pushed the stock in the right direction. Those of you who jumped in early are probably pretty happy about this, but they mustn’t forget that getting a bit carried away could be costly.
And this is especially true in VGTL‘s case because the stock could be threatened by quite a lot of dilution. Between March 31, 2014 and December 31, 2014, the company raised a total of $987 thousand through the issuance of various convertible notes. All of the debt can be turned into stock at discounts ranging from 40% to 45% and by the looks of things, some of the note holders have already taken advantage of the favorable terms. According to a Schedule 13 form from March 3, the number of issued and outstanding shares stood at about 29 million a couple of months ago. Over the last two sessions alone, investors managed to trade more than twice that amount.
Toxic debt has brought many penny stocks to their knees and we’re not sure if social media and message boards chatter is enough to stop VGTL from joining the not-so-exclusive club. Make sure you tread carefully.
